Ovostar Union N.V. (WSE: OVO) (hereinafter, the “Group”), a vertically integrated holding company, one of the leading egg and egg products producers in Ukraine, announces its financial results for the three months ended 31 March 2016.
Revenue, gross profit and gross margin
Regardless of increase in prices on eggs and egg products in UAH and significant growth in sales volume of egg products, the Group’s revenue for the 1Q 2016 increased by 4% year-on-year to mUSD 17.8 due to significant 21% devaluation of Ukrainian hryvnia from 21.12 UAH to 25.65 UAH per 1 USD.
The export sales for the reporting period increased by 46% year-on-year to mUSD 6.3, while the share of export revenue amounted to 36% (1Q 2015: mUSD 4.3 and 25% respectively). The gross profit decreased by 5% year-on-year to mUSD 7.6. The gross profit margin amounted to 43% (1Q 2015: 47%).
Operating profit, EBITDA and cash flow from operating activities
The Group’s operating profit for the 1Q 2016 decreased by 24% year-on-year to mUSD 6.4 (1Q 2015: mUSD 8.3) as a result of amendments to the Tax Code effective since 1 January 2016, which reduced income from special VAT treatment, and significant increase in transportation costs related to the export deliveries.
EBITDA in 1Q 2016 decreased by 22% year-on-year to mUSD 6.9, while EBITDA margin amounted to 39% (1Q 2015: mUSD 8.8 and 52% respectively). Net cash flow from operating activities increased by 16% year-on-year to mUSD 9.7.
Net profit and exchange differences on translation to presentation currency
Over the 3 months 2016 net profit amounted to mUSD 6.1 (1Q 2015: mUSD 9.1). The Group’s net profit during 1Q 2016 experienced the negative influence from strengthening EUR against USD that resulted in mUSD 0.2 of finance costs, while the weakening EUR against USD over 1Q 2015 generated mUSD 1.1 of finance income. The Group has recorded negative exchange differences on translation to presentation currency in the amount of mUSD 8.5 that have been reflected in equity.
The Group’s CEO Borys Bielikov noted:
“Overall, the Groups’ management is satisfied with financial results for the 1Q 2016 despite further devaluation of Ukrainian hryvnia. The Group managed to increase its share of export revenue to 36%, out of which the EU sales amounted to 16%.”